The Rivers State Governor, in defiance to the Federal Government, has gone ahead to sign into law the bill on Value Added Tax (VAT) collection in the state.
This follows the quick passage of the bill by the Rivers State House of Assembly after a Federal High Court in Port Harcourt declared that the Rivers State Government and other states of the federation are constitutionally empowered to collect VAT and not the Federal Inland Revenue Service (FIRS).
Wike, while signing the bill into law at the Government House, Port Harcourt, maintained that the judgment of the Federal High Court sitting in Port Harcourt had sufficiently addressed the illegality perpetrated by the Federal Inland Revenue Services (FIRS), according to the News Agency of Nigeria.
The governor also signed into law the Open Rearing and Grazing Prohibition Law No 5 of 2021, The Child’s Rights Amendment Law No 2 of 2021, The Residents Registration Agency Law No 6 of 2021 and the Naming and Renaming of Infrastructure Law No 3 of 2021.
What the Rivers State Governor is saying
Wike said, “The Federal High Court sitting in Port Harcourt has addressed the illegality perpetrated by the Federal Inland Revenue Services (FIRS) on behalf of the Federal Government in the collection of VAT in states.’’
The Governor pointed out that when agencies of the Federal Government were allowed to illegally demand and collect taxes meant for states to collect, they strangulate the states financially and turn them to be beggars.
He said, “But we (Rivers State) are standing on the part of history as representatives of the state to have taken the bull by the horn to challenge the illegality of the Federal Government through the Federal Inland Revenue Services (FIRS).
“Of course, we are all aware that the states have already been strangulated. Most states depend on allocation from the federation account. States have been turned to beggars, hardly will any day pass that you will not see one state or others going to Abuja to beg for one fund.’’
While dismissing the FIRS report that 30 states would suffer if some states were allowed to collect VAT, Wike said no campaign of calumny or blackmail on the part of FIRS would make what was illegal become legal.
He added that FIRS should be concerned about establishing whose duty it is to collect VAT and the constitutionality of such a position before talking about who was going to suffer or not.
He said, “In this state, we awarded contracts to companies and within the last month, we paid over N30 billion to the contractors and 7.5 per cent will now be deducted from that and be given to FIRS.
“Now, look at 7.5 per cent of N30 billion of contracts we awarded to companies in Rivers State, you will be talking about almost N3 billion only from that source. Rivers State Government has never received more than N2 billion from VAT at the end of the month.
“So, I have contributed more through the award of contract and you are giving me less, what is the justification for it.”
In case you missed it
- It can be recalled that on August 9, 2021, the Federal High Court sitting in Port Harcourt declared that it is the Rivers State Government and not the Federal Inland Revenue Services (FIRS) that should collect Valued Added Tax (VAT) and Personal Income Tax (PIT) in the state.
- The court presided over by Justice Stephen Dalyop Pam, also issued an order of perpetual injunction restraining FIRS and the Attorney General of the Federation, both first and second defendants in the suit, from collecting, demanding, threatening and intimidating residents of Rivers State to pay to FIRS, personnel income tax and VAT.
- The FIRS has, however, appealed the judgement by the Federal High Court in Port Harcourt, asking for a stay of execution pending the determination of the appeal, while also asking taxpayers to continue to meet their tax obligations with the federal government including VAT.